AIR Worldwide Analysis Finds European Insurers Could Face Winter Storm Losses Exceeding €40 Billion

BOSTON, Oct. 25, 2006 — A new analysis of European extratropical cyclones by AIR Worldwide Corporation (AIR) confirms that Europe could experience a winter storm resulting in insured losses in excess of €40 billion.

“For an extratropical cyclone to produce a loss greater than we have experienced to date, it takes the right combination of just three storm characteristics: size, intensity, and path,” said Dr. Peter Dailey, meteorologist and director of atmospheric science at AIR. “The largest historical losses have resulted from storms with extremes incorporating one or two of these ingredients. At some point, we will experience a storm where all three will coincide.”

Windstorm Daria, which caused damage across six countries in 1990, was one of the largest European windstorms in recent history. Using its extratropical cyclone model for Europe, AIR estimates that if Daria were to recur today, it would cost insurers more than €10 billion.

“Daria was large, but it is not the most intense storm in the historical record,” said Dr. Dailey. “A storm that impacted Greenland and Iceland in December 1986 was both large and much more intense. The 1986 storm had the lowest central pressure ever recorded for an extratropical cyclone in the Northern Hemisphere but remains largely unknown because it failed to reach the population centers of continental Europe.”

The AIR study determined that had the jet stream been in a somewhat different position at the time, the storm could have taken a path over Europe’s highest density of insured properties.
“An extratropical cyclone that is as large as Daria, intense as the December 1986 storm and follows a path over Europe’s highest density of insured properties is entirely possible from a meteorological standpoint,” said Dr. Dailey. “Our analysis shows losses from such a storm could exceed €40 billion.”

“Many insurers were surprised by the $41 billion insured loss resulting from Hurricane Katrina, despite the fact that the AIR U.S. hurricane model already contained hundreds of scenarios with higher losses,” said Yörn Tatge, managing director of AIR Worldwide GmbH. “Similarly, European insurers need to ensure they are prepared for winter storm losses far beyond those experienced to date. Winter storms are by far the greatest threat for Europe in terms of insured losses. It’s not a question of if, but rather of when.”

About AIR Worldwide Corporation
AIR Worldwide Corporation (AIR) is a leading risk modeling company helping clients manage the financial impact of catastrophes and weather. Utilizing the latest science and technology, AIR models natural catastrophes in more than 40 countries and the risk from terrorism in the United States. Other areas of expertise include site-specific seismic engineering analysis, catastrophe bonds, and property replacement cost valuation. An ISO business, AIR was founded in 1987 to provide its insurance, reinsurance, corporate, and government clients a complete line of risk modeling software and consulting services that produce consistent and reliable results. Headquartered in Boston, AIR has additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.

About ISO
ISO is a leading provider of products and services that help measure, manage and reduce risk. ISO provides data, analytics and decision-support solutions to professionals in many fields, including insurance, finance, real estate, health services, government and human resources. Clients use ISO’s databases and services to classify and evaluate a variety of risks and detect potential fraud. In the United States and around the world, ISO services help customers protect people, property and financial assets.

Release: Immediate

Contacts:
Giuseppe Barone / Erica Helton
MWW Group (for ISO)
201-507-9500
gbarone@mww.com / ehelton@mww.com

Michael Gannon (AIR Worldwide)
617-267-6645